Fausta’s Blog

Click on Bamopoly for more detail:

Gateway Pundit, via Larwyn,

This, of course, was the same day he proposed another record spending bill that will cost taxpayers $3.8 trillion and will raise the national deficit to $1.6 trillion. This is nearly 4 times the 2008 national deficit when President Bush was in office.

I don’t usually watch Glenn Beck, but today he’s done an excellent job of explaining the national debt and why it is a problem.

We’re in a sea of trouble.

The jobs numbers will continue to remain dismal,

Obama Budget Would Impose Host of Tax Increases
Obama budget plan would imposes host of tax increases on businesses, wealthy families

The budget proposal released Monday would extend Obama’s signature Making Work Pay tax credit — $400 for individuals, $800 for a couple filing jointly — through 2011. But it would also impose nearly $1 trillion in higher taxes on couples making more than $250,000 and individuals making more than $200,000 by not renewing tax cuts enacted under former President George W. Bush. Obama would extend Bush-era tax cuts for families and individuals making less.

Obama revived numerous proposals for business tax increases that didn’t fare well in Congress last year, including a scaled-down plan to increase taxes on U.S. companies with major overseas operations, and plans to increase taxes on oil and gas companies.

In all, Obama would increase taxes on some businesses and wealthy individuals by a total of about $1.4 trillion over the next decade, while cutting taxes for middle-class workers and other businesses by about $330 billion. The bottom line: Tax receipts would increase by about $1.1 trillion over the next decade.

Since I am certain we’ll be having inflation, the “middle-class” may find out that an income of $200,000 does not make you rich – as is already the case in Manhattan. But I digress.

The budget accounts for a $33 billion tax cut that Obama wants Congress to include in a new jobs bill. It would give companies a $5,000 tax credit for each new worker they hire in 2010. Businesses that increase wages or hours for their current workers in 2010 would be reimbursed for the extra Social Security payroll taxes they would pay.

If Obama was interested in businesses hiring, he would cut their taxes now, instead of giving tax credits or reimbursements whose effect is to inject more money into the government, with the government as middleman.

More and more taxes, punishing Obama’s straw men: the “rich”, the “bankers”, the oil companies, big business, and financial institutions.

Squeeze the “rich”:

—Raise the top two income tax rates for individuals, from 33 percent and 35 percent, to 36 percent and 39.6 percent, respectively. Unless Congress intervenes, those rates will rise next Jan. 1 when Bush’s tax cuts expire. That government would reap $365 billion over the next decade.

Screw the non-profits and charities, and the housing market:

—Limit the itemized tax deductions high earners can claim for charitable donations, mortgage interest and state and local taxes, raising about $210 billion for the next decade.

Hamper investments:

—Increase the top capital gains tax rate from 15 percent to 20 percent for families making more than $250,000 a year and individuals making more than $200,000. The proposal would raise about $105 billion.

Phony tax credits, instead of effective tax cuts that would encourage businesses:

—Make the research and experimentation tax credit permanent, saving businesses about $83 billion over the next decade.

—Impose a “financial crisis responsibility fee” on large financial institutions, raising $90 billion over the next decade.

—Restrict the ability of international companies to defer taxes on profits made overseas, raising about $26 billion over the next decade.

—Impose a total of about $39 billion in tax increases on oil, gas and coal companies over the next decade.

—Change the way profits made by investment fund managers are taxed, raising an additional $24 billion over the next decade.

In short, a menu of big-government bureaucratese, seasoned with class struggle, which won’t help businesses.

There will be no podcast this morning.

Today’s headline: New home sales unexpectedly fall in December

Sales of newly built U.S. single-family homes fell unexpectedly in December, data showed on Wednesday, the latest indication that the government-led housing recovery might be losing some steam.

The Commerce Department said sales fell 7.6 percent to a 342,000 unit annual rate from an upwardly revised 370,000 units in November. It was the second straight month that new home sales declined.

Last week, jobless claims “unexpectedly” worsened: Jobless Claims in U.S. Unexpectedly Rise on Backlog

More Americans than anticipated filed claims for unemployment benefits last week, reflecting a backlog of applications from the year-end holidays.

Initial jobless claims rose by 36,000 to 482,000 in the week ended Jan. 16, the highest level in two months, from 446,000 the prior week, Labor Department figures showed today in Washington.

Before that, foreclosures rose, also “unexpectedly“.

Considering we’re in a recession, and the Obama administration continues to castigate private business, it’s difficult to ascertain why the above three rose “unexpectedly“. It is to be expected.

Obama to Seek Spending Freeze to Trim Deficits, says the NYTimes.
So!
Is he cutting the proposed second stimulus bill? No.
The Obamacare bill(s)? No.
Medicare? No.
Medicaid? No.
Social Security? No.

But! It’s the symbolism that matters!

But one administration official said that limiting the much smaller discretionary domestic budget would have symbolic value. That spending includes lawmakers’ earmarks for parochial projects, and only when the public believes such perceived waste is being wrung out will they be willing to consider reductions in popular entitlement programs, the official said.

“By helping to create a new atmosphere of fiscal discipline, it can actually also feed into debates over other components of the budget,” the official said, briefing reporters on the condition of anonymity.

We’re awash with bs, folks. Nick Gillespie (via Instapundit) calls out Obama’s Empty Cost-Containment Rhetoric:

Matt Welch already zeroed in some of the more b.s.-laden aspects of President Obama’s Braveheart-level brave pledge to freeze a tiny wafer-thin aspect of federal spending. To use Obamaesque rhetoric: Let’s be clear. This freeze is likely to be as effecfive in curbing spending as cryogenic freezing of Ted Williams’ head was for keeping the Splendid Splinter in good shape for the baseball draft in the year 2525.

Another point to note on Obama’s three-year freeze on discretionary non-defense, non-homeland-security spending: The part of the budget that Obama is chilling is responsible for a whopping one-eighth of annual federal spending. By the prez’s own accounting, the action (which I guarantee won’t hold up anyway) would save at max a whopping $15 billion in fiscal year 2011.

To put that in perspective: The budget em>deficit in 2009 was $1.4 trillion. Which will likely be matched, or nearly matched, in 2010. The budget in 2009 was a hair under $4 trillion and was first figured at around $3.5 trillion for 2010 (expect that to rise, as it normally does).

To talk about possibly trimming $15 billion (and that’s only in foregone increases to whatever is already being spent) on a budget this size is like an already-broke dinner companion foregoing his third appetizer. It’s not gonna help much when the bill comes due.

Betsy came up with the perfect symbol for the symbolic cuts: Obama takes up his tiny hatchet.

Via The Corner by way of Larwyn,

Coming up next, since the economy is not in bad enough straits already, Obama’s populist assault on the finance industry, in the form of a “financial crisis responsibility fee”,
Obama’s Bank Tax Seeks $90 Billion to Repay Bailout

President Obama plans to call on Thursday for taxing about 50 big banks and major financial institutions for at least the next decade to recoup all taxpayer losses from the bailout of Wall Street.

The tax on banks, insurance companies and brokerages with more than $50 billion in assets would start after June 30 and seek to collect $90 billion over 10 years, according to a senior administration official who briefed reporters late Wednesday.

But the levy but would remain in force longer if all losses to the bailout fund, the Troubled Asset Relief Program, are not recovered after a decade.

This is to punish the financial institutions, even when,

the big banks have been objecting that taxpayers actually made money on the bailout loans. Many, including Goldman Sachs and JPMorgan Chase, have repaid their federal funds with interest and the government has also made money in selling the banks’ warrants that it held as collateral.

By the way,

The taxed firms are expected to pay the cost of bailout money that went to General Motors Co. and Chrysler LLC, which are exempt from the tax. The administration official defended the omission by contending that U.S. auto makers collapsed in part because of a financial crisis of the banks’ making.

Sweet for the unions – which are also exempt from the “cadillac tax” on high-cost medical benefit plans. It’s a deal,

The deal would temporarily exempt union health plans from a significant surtax on unusually generous health policies plans, giving union leaders time to negotiate new contracts, according to sources familiar with the talks.

Of course, Chris Dodd, Barney Franks, and Congress’ own Community Reinvestment Act (which is still law and will be expanded) had nothing to do with the financial crisis.

As it turns out,

House Financial Services Chairman Barney Frank “is mounting a new effort to limit executive compensation as Wall Street prepares this month to pay out huge bonuses.” Frank, “said he is looking at levying new taxes or fees on financial firms as well as ways to further empower shareholders to restrict pay.” Frank, “called a hearing for Jan. 22 and said he is not convinced by arguments that restrictions would hurt the industry by forcing well-paid employees to go elsewhere.”

Nice going, Barney.

How’s that for “financial crisis responsibility”?

Associated Press is starting to notice,
Stimulus cash doesn’t create local jobs

An Associated Press analysis of stimulus spending found that it didn’t matter if a lot of money was spent on highways or none at all: Local unemployment rates rose and fell regardless. And the stimulus spending only barely helped the beleaguered construction industry, the analysis showed.
…
For its analysis, the AP examined the effects of road and bridge spending in communities on local unemployment; it did not try to measure results of the broader aid that also was in the first stimulus such as tax cuts, unemployment benefits or money for states.

Even within the construction industry, which stood to benefit most from transportation money, the AP’s analysis found there was nearly no connection between stimulus money and the number of construction workers hired or fired since Congress passed the recovery program. The effect was so small, one economist compared it to trying to move the Empire State Building by pushing against it.

The stimulus money was ineffective, everywhere:

The Obama administration has argued that it’s unfair to count construction jobs in any one county because workers travel between counties for jobs. So, the AP looked at a much larger universe: The more than 700 counties that got the most stimulus money per capita for road construction, and the more than 700 counties that received no money at all.

For its analysis, the AP reviewed Transportation Department data on more than $21 billion in stimulus projects in every state and Washington, as well as the Labor Department’s monthly unemployment data. Working with economists and statisticians, the AP performed statistical tests to gauge the effect of transportation spending on employment activity.

There was no difference in unemployment trends between the group of counties that received the most stimulus money and the group that received none, the analysis found.

In the meantime, White House estimates jobs created and saved using $20 million website and triple-counting, but mostly triple-counting, through accounting gimmicks:

Under the old rules, only jobs that were actually newly created or not lost because of stimulus money were counted. Now the administration plans to count all jobs for projects funded by stimulus money—even if that job already existed and the person was never in danger of losing the job.

Or, get this, if the person who was already employed gets a pay raise, all for the sake of hiding the real costs of the stimulus:

The new methodology, however, will do more than just make the stimulus program look like it is creating more jobs than it actually is. It will also conceal an important cost of the stimulus—the economic distortion that comes from diverting labor away from projects favored by the market toward projects favored by the government. In the past, the government didn’t get credit for drawing jobs away from market based projects—limiting its incentives to do so. Now that it gets credit for those jobs, the distortive effects are likely to become greater.

One effect is already felt: How The Government Payroll Replaced Goods-Producing Jobs,

We’re now smack in the middle of the government payroll economy; good-bye profit-making, hello profit-eating.

In today’s podcast at 11AM Eastern,

Redrado Remains at Argentine Central Bank Amid Clash after president Cristina Fernandez provokes a constitutional crisis.

Constitutional Showdown in Argentina
President Cristina Kirchner tries to seize control of the central bank.
Crisis Threatens to Curb Central Banks
Argentina’s bad timing
Argentine President and Central Bank in Standoff

The Bureau of Labor Statistics has the bad news: (h/t Ed)

Nonfarm payroll employment edged down (-85,000) in December, and the unemployment rate was unchanged at 10.0 percent, the U.S. Bureau of Labor Statistics reported today. Employment fell in construction, manufacturing, and wholesale trade, while temporary help services and health care added jobs.

In December, both the number of unemployed persons, at 15.3 million, and the unemployment rate, at 10.0 percent, were unchanged. At the start of the recession in December 2007, the number of unemployed persons was 7.7 million, and the unemployment rate was 5.0 percent. …

Total nonfarm payroll employment edged down in December (-85,000). Job losses continued in construction, manufacturing, and wholesale trade, while temporary help services and health care continued to add jobs. During 2009, monthly job losses moderated substantially. Employment losses in the first quarter of 2009 averaged 691,000 per month, compared with an average loss of 69,000 per month in the fourth quarter.

This is sharp drop on the workforce, 661,000 fewer people working.

James Pethokoukis lists
9 reasons why the Dec. jobs report is bad news for Dems

9 reasons why the Dec. jobs report is bad news for Dems
Jan 8, 2010 10:33 EST
2010 election | Obamanomics | unemployment

Talk about one last gasp from the horrible year that was 2009. On the political front, the December jobs numbers were terrible news for the White House and congressional Democrats in a midterm election year. Here’s how it plays out:

1. Remember this simple formula: Unemployment drives presidential approval numbers and presidential approval numbers drive midterm election results.

2. President Barack Obama’s approval numbers are hovering just a tick below 50 percent. Since 1962, the average House midterm loss for the president’s party when his approval is sub-50 percent is 41 seats. The GOP needs 40 to take the House.

3. And make no mistake, the December unemployment numbers were bad both economically and politically. The 85,000 job loss was worse than expected and will be played that way the media. The continuation of a double-digit unemployment also resonates with voters. And not a in a good way.

4. Then will come the second-take stories that will notice the shrinking labor force, which dropped by nearly 700,000 from November. Had it stayed stable for last month, the jobless rate would have been 10.4 percent. Had it stayed stable since August, the jobless rate would be 11 percent!

5. But wait, there’s more! The U-6 rate rate which combines the basic jobless rate, discouraged workers, part-timers-who-would-rather-be-full-tim ers climbed to 17.3 percent. And the average duration of unemployment rose to a record high 29.1 weeks.

Go read the other four reasons.

Power Line explains how the Obama economy is worsening the recession.

What’s to come? The upcoming healthcare legislation, cap and trade, and inflation are not going to make any of these numbers any better.

UPDATE
Not depressed enough yet?
Unemployment Exhaustion Rate = 53.78%, a New High

Update, Saturday 9 January
Doug Ross has a post you must read:
The Obama Recovery: more than 50% will pay no federal taxes in ‘09 — a John Galt Tipping Point

In today’s podcast at 11AM Eastern,
Behind Impasse Over Argentine Central Bank Is Battle For Cash

Behind the dispute between the Argentine government and the governor of the central bank is a battle over the administration’s efforts to secure new sources of cash to maintain high public spending.

The government says it must continue to spend generously to reboot the economy and prop up employment after a slump in 2009. Political opponents, invigorated by gains in recent midterm elections, contend that the government is forcing through extra spending without consulting Congress as it seeks to boost its waning popularity ahead of presidential elections in late 2011.

Public outlays have risen constantly, and government revenues haven’t kept up. While income was up about 12.5% in 2009, spending was up 29%, according to the ACM consulting firm.

The latest move to borrow $6.6 billion from the central bank to pay down debts coming due this year would have freed up cash from the budget. At the same time, it would improve the country’s profile among investors, helping it regain access to international debt markets to be able to borrow at reasonable rates.

President Cristina Fernandez on Thursday signed a decree removing Martin Redrado from the helm of the central bank for dragging his feet in setting up the fund as he sought assurances that all the right procedural steps were taken.

A federal judge has suspended the decree that would allow the government to use foreign reserves to pay debt. The government says it will appeal the judge’s decision.

Redrado has stepped down: The BBC reports,

Advertisement

Argentina’s central bank boss has stepped down after the president signed a decree firing him for refusing to use currency reserves to pay foreign debt.

Cristina Fernandez de Kirchner cited misconduct and dereliction of duties in a decree dismissing Martin Redrado.

A spokesman for Mr Redrado said he had agreed to step aside but not to resign, and was launching a legal challenge.

As a result,

he county’s bonds were the worst performers on JPMorgan’s Emerging Market Bond Index Global. The country’s risk premium was raised by 18 basis points, to 674 basis points over Treasurys, for a loss of 1.74%.

And despite some analysts’ calls that a sell-off presented a good buying opportunity, not too many buyers stepped up, a trader in New York said.

Pressure was put on the bonds when central bank governor Martin Redrado vowed to stay in his job despite President Cristina Fernandez’s call for him to step down. Late Thursday, Fernandez signed a decree that sacked Redrado, citing poor conduct. The government said it is proceeding with the $6.6 billion fund using central bank reserves.

The dispute has heightened market concerns over the formation of a debt-payment fund that is seen as a major step for the country as it looks to settle its defaulted debt and regain access to international capital markets.

“The main risk to Argentine asset prices is an unwarranted delay or an eventual cancellation of the reopening of the 2005 debt exchange,” said Boris Segura, an economist at RBS.

Prior post and podcast here.